A reputable credit counselling agency can play a useful role in helping you facilitate a plan to deal with your debts. The program offered by such agencies is called a debt management plan.
A debt management plan is an arrangement facilitated by a credit counselling agency whereby they would negotiate with your creditors:
- a reduction or stoppage of interest on your debts
- an extended period (usually no longer than 60 months) to repay your debts in full
A word of caution: there are various businesses which will advertise themselves as “credit counsellors”, “debt counsellors”, “debt management consultants” or some other euphemism to give you the impression that they are qualified to deal with your financial problem. In fact, many of these businesses are at best unqualified (i.e., no formal financial training or licensing) or at worst incompetent.
If you are in Ontario and wish to deal with a credit counselling agency in facilitating a debt management plan, ensure that is a member of the Ontario Association of Credit Counselling Services. Their website can be found here.
In addition to dealing with your debts, the credit counsellor will work with you to develop and maintain a monthly budget to enable you to live on cash, so you won’t have to resort to using credit again.
This post should not be interpreted as legal advice or a legal opinion. Please consult your Fong and Partners Inc. advisor to review your own particular circumstances.
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